Jury orders Philip Morris to pay $28B in damages

LOS ANGELES -- A jury awarded a record-shattering $28 billion in punitive damages Friday to a 64-year-old former smoker who sued Philip Morris Inc. for fraud and negligence.

GARY GENTILE

Published 12:00 am, Saturday, October 5, 2002

Analysts said the verdict will almost certainly be reduced on appeal. But the jaw-dropping amount suggested growing hostility toward the tobacco industry.

The Superior Court jury awarded the amount to Betty Bullock, who started smoking when she was 17 and was diagnosed last year with lung cancer that has since spread to her liver. Last month, the jury ordered the tobacco company to pay Bullock $750,000 in damages and $100,000 for pain and suffering.

Philip Morris said it would ask the court to set aside the verdict and order a new trial.

The previous record for a verdict won by an individual against a tobacco company was $3 billion, awarded in June 2001 to Richard Boeken, a former heroin addict with cancer who died in January. But a California judge last year reduced that verdict against Philip Morris to $100 million.

"I think the judge will see this as a runaway jury award," Merrill Lynch tobacco analyst Martin Feldman said. He noted that Philip Morris has never lost a case on appeal.

During Bullock's trial, Philip Morris did not try to defend its past actions. Instead, the company turned the spotlight on Bullock and her decision to smoke. The strategy was a major shift from previous defense efforts.

"Testimony during the trial showed that Ms. Bullock was aware of the health risks of smoking and was warned repeatedly of those risks by her doctors over four decades, and her daughter also urged her to quit. Her response: 'I am an adult, this is my business,'" said William Ohlemeyer, the company's associate general counsel.

Bullock's lawyer, Michael Piuze, argued that Philip Morris concealed the dangers of cigarettes with a widespread disinformation campaign that began in the 1950s. He told jurors it was "the largest fraud scheme ever perpetrated by corporations anywhere."

Piuze used photographs of Bullock, cigarette ads from her teenage years and internal tobacco industry documents to lay out his contention that Philip Morris concealed the dangers of cigarettes.

The company denied any campaign to fool smokers.

Two years ago, a jury awarded thousands of Florida smokers $145 billion in punitive damages against Philip Morris, R.J. Reynolds, Brown & Williamson, Lorillard and Liggett. The award has been appealed.

"At this point, it's really open season on the industry," said Richard Daynard, a law professor at Northeastern University in Boston and chairman of the Tobacco Products Liability Project.

"Juries all around the country are sending a message that this conduct was not only totally inexcusable but that it was so outrageous there is no amount of money that would be enough to punish the people who perpetrated it,"

The California case also drew interest because it follows an Aug. 5 state Supreme Court ruling that grants cigarette makers a new window of immunity. The decision said most statements and acts by tobacco companies between 1988 and 1998 cannot be used as evidence against them because of a law, now repealed, shielding them from liability.

Some analysts think the ruling will give cigarette makers ammunition to overturn three recent plaintiff awards in California -- including the Boeken verdict, which was also won by Piuze.